NSA Spying Is Costing American IT Firms More Than We Think

Introduction

Spying by the NSA (National Security Agency) as well as increasing demands for client data by the feds, continues to cost U.S IT magnates billions of dollars in lost revenues and at the same time damaging the American companies’ reputation.

That is what Mark Jaycox, the legislative analyst for Electronic Frontier Foundation, thinks. Following the leaking of NSA documents by Edward Snowden, who is currently on the run, successful programs of the agency, like clandestinely inserting backdoor Trojans into hardware manufactured by U.S and intended for foreign markets, is likely to go on in spite of the firestorm created by the disclosures.

According to Jaycox, NSA is just like the normal bureaucracy. Working government programs continue while the ones that don’t are terminated. After that, Jaycox says, they try new ones.

Jaycox further adds that, as a result of the fallout, a suspicious climate has been created, which has in turn affected many US communication and tech firms. He says that his research, which was derived from US corporate earnings and available documents from NSA, show that executives have made clear damage that the revelations did to business.

National Security Agency spying, according to Jaycox, has affected many cloud-based firms, software, telcos and many other things for US firms.

Cisco, in fact, after learning that some of their products had been backdoored using NSA Trojan virus, it blasted the spy agency as well as the government of the US for affecting their bottom line adversely.

Jaycox recently came back to Bay Area after chairing Black Hat security conference last week in Las Vegas.

The conference was about the spy agency’s global metadata collection programs, which include penetrating services like Google, Twitter, Facebook and Twitter among others.

The fact that NSA spying is affecting U.S firms was confirmed by a former NSA official who said that many hardware and software customers had started seeking other alternatives like Huawei, a Chinese firm believed by the US intelligence to be working with China’s security and military services.

“The steady stream of news regarding activities of NSA has raised wider questions, especially on the international front, about the security of tech programs coming from US firms,” says a former NSA official.

This, according to the former employee of NSA, has hit bottom lines of US firms like Juniper and Cisco, forcing customers to look for alternatives such as Huawei.

Although the NSA’s budget is classified, James Bamford, author of 5 books on NSA and with knowledge about the spy agency like no other, pegs it to around $10.5B for the financial year of 2013. In keeping with amplified pressure on NSA following the increased terror fight as well as the need to boost secrets from international firms that compete with the US, the figure is expected to increase.

Last year, German politicians urged companies and citizens to take measures to avoid the NSA’s electronic data collection efforts. Among the ways of achieving this, the politicians said, was to desist from sending and storing data through US cloud-based companies.

In fact, Hans-Peter Friedrich, German Interior Minister, declared after the extent of NSA efforts was discovered that “whoever fears that their communication is being tampered with in any way ought to use services which don’t go via American servers.”

German justice minister, Jorg-Uwe Hahn, later called on Germans to boycott all U.S firms.

To be sure, a number of these reactions are inclined toward hysteria. The reason is because the total damage has yet to be counted. Again, we are never going to truly know the scope of the blowback. In a world characterized by signal of intelligence, smoke and mirrors tends to speak volumes of the actual scope as well as methodology of metadata collection.

Citing a 2013 Information Technology and Innovation Foundation report, Jaycox said that the cloud computing industry of the US, coupled with its subjugation by the US intelligence agencies, is forcing many European countries to look internally and start putting together their own facilities. At the same time, they continue to shun American technology companies.

Jaycox surmises that NSA’s severe consequences on the tech sector have led to some issues. For one, there is loss of actually revenue, loss of American tech leadership in sectors such as cloud computing and lastly there is damage to reputation.

North Sydney IT, Australian Cisco support team and partner further opines that the damage to reputation is linked closely to decline in American tech leadership.The company reported a slump of 12% in sales. Also, as was reported by Financial Times, there was a 25% drop of orders in Brazil. In Russia, the drop was even bigger in Russia, which saw a decline of 30%.

According to Cisco executives, NSA’s spying activities have created concern or uncertainty which is likely to have a harmful effect on a number of tech companies.

In fact, last week VentureBeat reported that officials from U.S. intelligence strongly felt that Snowden’s leaks to Guardian as well as other media channels like Der Spiegel of Germany is the reason Chinese authorities have launched recent raids against Microsoft.

VentureBeat reports that last week, a ranking erstwhile U.S intelligence officer said that while they believed that Snowden is the reason for Chinese actions as well as recent moves by Vladimir Putin to against IT firms from America, they do not have proof.

The true extent and impacts of Snowden’s actions may never be fully quantified. However, the report paints a damning picture on long-term damage that may be done by the perception that American companies have been compromised. Others even think that they are colluding with NSA and that they are untrustworthy.

According to Jaycox, NSA can only do so much depending on its budget. The NSA’s resources, just like any other agency, are not finite. Programs are monitored to ensure that they produce. They are still restricted to how much they can spend, according to Jaycox.

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